Risk-free Curry? Searching for the Right Growth Strategy

Can growth really be risk-free? That’s a question that I’m pondering after reading this excellent entrepreneur profile in the Telegraph Your Business Section. It features an interview with Sanjay Anand, founder of Madhu’s in Southall…

Madhu’s operates an authentic indian restaurant in Southall, London and the business has a turnover of £5m p.a. However, the vast majority of those sales are not from the restaurant, but instead from providing outside catering business for weddings and corporate events.

The question about risk-free growth arises from a difference of opinion between Sanjay Anand and his son, who wants to pursue an expansion strategy based on organic growth - building the number of retail outlets and also expanding the capacity of the contract catering operation to supply ready meals to supermarkets. It sounds like a classic AQA BUSS3 case study, complete with the obligatory option to bet the business by supplying Tesco!

Sanjay has resisted (so far). Hence his quote:

“I like growth that is risk free. After 30 years, we only turn over £5m. If I was a risk taker, that could easily have been £50m.”

This would make a great discussion point for students.

- What might Sanjay mean by “risk-free”?
- Can any business investment or growth be achieved without taking a moderate risk, even if it is low and manageable?
- What kind of returns on investment (or ROCE) does Sanjay find acceptable from his safety-first strategy?
- If he doesn’t consider himself a risk-taker, then is Sanjay really an entrepreneur?
- To what extent can a cautious approach like this help or hinder the ability of a small business like Madhu’s to realise its potential?

The article is packed full with other useful case study material. You could get students to calculcate net profit margins from the information given; evaluate the impact of changed immigration legislation on his business; assess ways in which Madhu’s could respond to the adverse effect of rising operating costs on its profit margins.

Over to your students!